"As we come to the end of another academic year, college seniors across the country don their caps and gowns to walk down the aisle to receive their degree celebrating years of effort while representing their transition from a student into the national workforce. But that 'sheepskin' comes at a cost; a financial burden that some may take an entire lifetime to recover from," John DeMaggio writes in an opinion piece for The Hill.
"In their report 'Trends in Student Aid 2016,' the College Board informs us that 'In 2014-15, the 61% of bachelor's degree recipients from public and private nonprofit institutions who borrowed graduated with an average of $28,100 in debt.'
As the graduation parties fade into distant memories the prospects for these graduates securing good paying jobs may not meet their expectations or cover their ability to repay these student loans.
... Andy Puzder writing in The Hill states that:
'Congress should act before we experience a collapse in the student debt market similar to the collapse in the subprime mortgage market that led to the recession after the 2008 financial crisis.'
... GAO found in their December 2014 report, 'Education Should Strengthen Oversight of Schools and Accreditors', 'To access federal student aid — which totaled more than $136 billion in fiscal year 2013 — schools must be accredited to ensure they offer a quality education.' GAO found that from October 2009 through March 2014 '…accreditors — independent agencies recognized by the Department of Education (Education) — sanctioned about 8 percent of schools for not meeting accreditor standards. They terminated accreditation for about 1 percent of accredited schools, thereby ending the schools' access to federal student aid funds.' Further, GAO found that '…accreditors were more likely to have sanctioned schools with weaker financial characteristics than those with stronger ones.'
Given this as an incentive we can further question the ease with which the statistics can be manipulated to disguise the actual default rate from a schools graduated population. In an April 2018 report on federal student loans, the GAO concludes '…While postponing payments through forbearance may help struggling borrowers avoid default in the near term, it increases borrowers' ultimate repayment costs and does not necessarily put borrowers on a path to repaying their loans. Moreover, including borrowers who spend 18 months or more in forbearance in the CDR (Cohort Default Rate) calculation reduces the CDR's ability to hold schools accountable for high default rates since long periods of forbearance appear to delay — not prevent — default for some borrowers.'"
NASFAA's "Headlines" section highlights media coverage of financial aid to help members stay up to date with the latest news. Inclusion in Today's News does not imply endorsement of the material or guarantee the accuracy of information presented.
Publication Date: 5/17/2018